Obamacare rates to rise 7.5 percent next year

Obamacare customers are facing an average 7.5 percent price increase for a key benchmark health plan next year, according to limited data the Obama administration released just days before the start of a challenging enrollment season.

But the average rate hikes will vary dramatically from state to state — skyrocketing more than 30 percent in Alaska, Montana and Oklahoma while dropping 12.6 percent in Indiana.

Story Continued Below

The administration's analysis looks at the second-cheapest "silver" plan available to customers when open enrollment begins on Nov. 1. Those benchmark plans, which are among the most popular sold on the law's health insurance exchanges, are important because they're used to calculate how much federal support low- and middle-income exchange customers will receive toward their monthly premiums.

More than 70 percent of exchange customers chose silver plans this year, which cover about 70 percent of medical costs. Roughly 80 percent of Obamacare customers received subsidies, worth an average monthly credit of $270.

The Centers for Medicare and Medicaid Services, which oversees the marketplaces, stressed that nearly 80 percent of exchange customers can buy a 2016 benchmark plan that will cost $100 or less a month after factoring in premium subsidies. In addition, seven out of 10 customers will have an option that costs no more than $75.

Many experts had predicted double-digit rate hikes for 2016, driven in large part by insurers signing up sicker, more expensive customers than anticipated during the first two years of the exchanges. Skyrocketing drug costs and the phasing out of programs designed to protect insurers entering the fledgling marketplaces from huge financial losses are also contributing to higher rates.

The 2016 rate hikes appear more modest than expected so far, though they are rising faster than this year's average 5.4 percent average increase. Still, the full picture won’t be clear until all the rates are released in the coming days.

The administration is predicting modest enrollment growth in the insurance marketplaces in 2016 as it gets harder to reach the remaining uninsured individuals. Officials project 10 million people will be enrolled in the exchanges by the end of 2016, up from just 9 million paying customers they expect to have at the close of this year.

Many customers will need to shop for new coverage if they want to get the best deal. About one-quarter of exchange customers who purchased coverage in 2014 changed plans this year, saving nearly $400 on average, according to the administration. More than two-thirds of counties will have at least three insurers competing for customers.

“If consumers come back to the Marketplace and shop, they may be able to find a plan that saves them money and meets their health needs,” said HealthCare.gov CEO Kevin Counihan in a statement.

Thirty-eight states will use HealthCare.gov during the upcoming three-month enrollment window.

Some states running their own exchanges, including California and New York, have already reported rate hikes in the single digits for next year.